Google Preparing For Google Price Index

October 12, 2010

A top company official at Google was quoted Tuesday in the Financial Times as saying that Google is readying its own “Google Price Index” based on a vast database of online purchases, providing a daily measure of inflation.

Hal Varian, the group’s chief economist, said at the National Association of Business Economists conference in Denver, Colorado that Google has not yet decided whether it will publish the index (GPI), which is still in development.

Varian said the GPI indicates a “very clear deflationary trend” for goods purchases online in just under a year of data gathering, a potentially worrying prospect for U.S. officials.

The GPI can be a much faster tool as results could be modeled at real-time speed. It is calculated differently from official statistics of consumption, which is a key indicator of U.S. economic growth.

The Commerce Department released the most recent official data at the beginning of October and showed consumer spending in August. Those figures showed spending jumped 0.4 percent in August as consumers spent more than predicted for the second straight month.